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Microsoft is set to lose British government contracts worth tens of millions of pounds after ministers announced plans to drop expensive software in favour of free or cheaper rivals, such as Google’s Docs system.

Official figures suggest that the public sector has spent £200 million on Microsoft’s Office suite of programs, which includes Word and Excel, in the past three years. However, Francis Maude, the Cabinet Office Minister, said yesterday that he was reviewing such contracts in an effort to force civil servants to adopt cheaper “open source” software, as part of a drive to find efficiencies in Whitehall.